TIDMCAPD
RNS Number : 2812A
Capital Limited
19 January 2024
Capital Limited
("Capital", the "Group" or the "Company")
Q4 2023 Trading Update
Capital (LSE: CAPD), a leading mining services company, today
provides its trading update for the period 1 October to 31 December
2023 (the "Period").
FOURTH QUARTER (Q4) 2023 KEY METRICS
Q4 2023 Q4 2022 vs Q3 2023 vs FY 2023* FY 2022 FY 2023 vs FY
Q4 2022 Q3 2023 2022
=============== ========== ========== =========== ========== ========== =========== =========== ==============
Revenue ($m) 84.5 79.1 6.8% 79.7 6.0% 318.4 290.3 9.7%
=============== ========== ========== =========== ========== ========== =========== =========== ==============
Drilling and
associated
revenue ($m) 54.1 58.3 -7.2% 51.2 5.7% 215.3 213.2 1.0%
--------------- ---------- ---------- ----------- ---------- ---------- ----------- ----------- --------------
Mining revenue
($m) 19.6 13.0 50.8% 18.0 8.9% 64.7 49.8 29.9%
=============== ========== ========== =========== ========== ========== =========== =========== ==============
MSALABS revenue
($m) 10.8 7.8 38.5% 10.5 2.9% 38.4 27.3 40.7%
--------------- ---------- ---------- ----------- ---------- ---------- ----------- ----------- --------------
All amounts are in USD unless otherwise stated.
* Unaudited numbers
Financial Highlights
-- FY 2023 revenue of $318.4 million, up 9.7% on FY 2022 ($290.3
million), marginally below guidance of $320-340 million; Q4
revenues were impacted by a number of factors.
- Q4 revenues were impacted by subdued activity in Mali and
operations not yet re-commencing in Sudan with Perseus.
- MSALABS revenues fell slightly behind its aggressive growth
target for 2023, as we drive adoption of the new PhotonAssay(TM)
technology. Revenues were up over 40% YoY and with major mining
companies now giving firm endorsement of the technology, we are
confident in the continued multi-laboratory rollout over the coming
year.
-- Q4 2023 revenue US$84.5 million, a 6.8% increase on Q4 2022
(US$79.1 million) and a 6.0% increase on Q3 2023 (US$79.7
million);
- Drilling and associated revenue for the quarter was $54.1
million, down 7.2% on Q4 2022 ($58.3 million) and up 5.7% on Q3
2023 ($51.2 million);
- Mining revenue for the quarter was $19.6 million, up 50.8% on
Q4 2022 ($13.0 million) and up 8.9% on Q3 2023 ($18.0 million);
and
- Laboratories (MSALABS) revenue for the quarter was $10.8
million, up 38.5% on Q4 2022 ($7.8 million) and up 2.9% on Q3 2023
($10.5 million).
Operational Update
-- Safety performance maintains its exceptional standing on a
global scale with the 2023 Total Recordable Injury Frequency Rate
("TRIFR") of 0.75 per 1,000,000 hours worked, a significant
improvement on FY 2022 (1.2).
-- Capital Drilling: Major contract long-term renewal
-- Sukari drilling services 5-year extension:
- Following a competitive bidding process, Centamin's Sukari
Gold Mine in Egypt has issued Capital with a letter of intent to
award a 5-year open pit drilling services contract extension,
commencing on January 1, 2025. Subject to conclusion of the
definitive drilling services agreement, which will include both
blast hole and grade control drilling, the contract will extend our
activities on site out to the end of 2029, 25 years after we
commenced operations in 2005.
-- Other contract wins:
- A two-year grade control drilling services contract with
Perseus Mining at the Sissingué gold mine in Côte d'Ivoire. This
expands our relationship with Perseus from existing contracts in
Sudan and the Yaouré mine, Côte d'Ivoire.
- Expanded rig count at Ivindo, Gabon, in 2024 under our
existing three-year reverse circulation and diamond drilling
services contract.
-- Fleet utilisation for the quarter was 72%, compared to 73% in Q4 2022 and 72% on Q3 2023;
-- Average monthly revenue per operating rig ("ARPOR") was
US$188,000 in Q4 2023, down 1.6% on Q4 2022 ($191,000) and up 5.0%
on Q3 2023 (US$179,000); and
-- Rig count increased from 126 to 127 through Q4 2023, net of depletion.
Q4 2023 Q4 2022 vs Q3 2023 vs FY 2023* FY 2022 FY 2023* vs FY 2022
Q4 2022 Q3 2023
============================== ======= ======= ========= ======= ======== ======== ======= ===================
Closing fleet size 127 129 -1.6% 126 0.8% 127 129 -1.6%
============================== ======= ======= ========= ======= ======== ======== ======= ===================
Average Fleet 127 129 -1.6% 126 0.5% 125 118 5.9%
------------------------------ ------- ------- --------- ------- -------- -------- ------- -------------------
Fleet utilisation (%) 72 73 -1.4% 72 0% 73 79 -7.6%
============================== ======= ======= ========= ======= ======== ======== ======= ===================
Average utilised rigs 91 94 -3.2% 90 1.1% 92 93 -1.1%
------------------------------ ------- ------- --------- ------- -------- -------- ------- -------------------
ARPOR*($) 188,000 191,000 -1.6% 179,000 5.0% 186,000 180,000 3.3%
============================== ======= ======= ========= ======= ======== ======== ======= ===================
Drilling revenue ($m) 51.4 54.2 -5.2% 48.6 5.8% 204.2 200.5 1.8%
------------------------------ ------- ------- --------- ------- -------- -------- ------- -------------------
Surveying revenue 0.9 1.2 -25.0%% 0.9 0% 3.7 4.7 -21.3%
============================== ======= ======= ========= ======= ======== ======== ======= ===================
Other Associated revenue (1)
($m) 1.7 2.9 -41.4% 1.8 -5.6% 7.4 8.0 -8.6%
------------------------------ ------- ------- --------- ------- -------- -------- ------- -------------------
Total Drilling and associated
revenue ($m) 54.1 58.3 -7.2% 51.2 5.7% 215.3 213.2 1.0%
------------------------------ ------- ------- --------- ------- -------- -------- ------- -------------------
*Average revenue per month per operating rig
*Unaudited numbers
(1) Associated revenue refers to revenue generated from
complementary services tied to our drilling operations.
All amounts are in USD unless otherwise stated
-- Capital Mining: First ore shipped from new mining contract:
-- Operations at our mining contract with Ivindo SA (Gabon) have
progressed well through Q4 2023, with the first ore from the
project being shipped in the quarter. The remaining equipment will
arrive on site in the coming months; and
-- Sukari Gold Mine (Egypt) waste mining contract saw consistent operations through Q4 2023.
-- MSALABS: Initiated strategic global partnership, breaking
into the USA market with largest contract in MSALABS history:
-- MSALABS has been awarded a five-year comprehensive laboratory
services contract with Nevada Gold Mines (NGM) in the United States
of America (USA).
- MSALABS will operate a state-of-the-art hybrid laboratory
incorporating three Chrysos PhotonAssay units as well as
traditional fire assay methods and full multi-element assaying
capabilities; and
- The contract is anticipated to generate $140 million over the
five-year term, with annual revenues of $30 million once fully
operational, making it the largest award of new business in the
history of MSALABS. Capital expenditure for the project is expected
of $7 million.
-- MSALABS has forged a global partnership with Barrick Gold and
Chrysos Corporation to deliver PhotonAssay(TM) technology across
Barrick mine sites.
- The three PhotonAssay(TM) units with NGM mark the start of
this broader partnership agreement, with trials underway for a
possible ten further PhotonAssay(TM) units by the end of 2025
across multiple of Barrick's other operations.
-- Capital Investments:
-- The total value of investments (listed and unlisted) was
$47.2 million as at 31 December 2023 ($42.1 million as at 30 June
2023); The portfolio recorded investment gains (unrealised) of
US$3.1 million in H2 2023; and
-- The portfolio continues to be focused on a select few key
holdings with our holdings in Predictive Discovery, Allied Gold
Corp and WIA Gold comprising the majority (85%) of our
investments.
Outlook
-- The Group continues to see strong demand across each of its business divisions;
-- Capital Drilling is set for further growth in 2024
particularly driven by the ramp up of operations with Nevada Gold
Mines, USA as well as strong growth potential across a number of
our existing operations;
-- Capital Mining will mobilise the last of the mining equipment
to the Ivindo site in Gabon in the coming months with the project
continuing to ramp up over the coming year. T he Sukari earth
moving contract is anticipated to maintain steady-state performance
throughout the remaining duration of the contract (mid 2024).
-- MSALABS continues to advance its ongoing multi-year expansion
strategy, particularly focused around the deployment of Chrysos
PhotonAssay(TM) units. The pipeline is very strong and underpinned
by the partnership recently formed with Barrick Gold and Chrysos
Corporation; and
-- Tendering activity remains robust across the Group with a
number of high-quality opportunities progressing.
-- Guidance for 2024 will be announced along with our FY2023 results.
Commenting on the trading update, Peter Stokes, Chief Executive,
said:
"In the past fiscal year, Capital has achieved a number of
landmarks that position the company for a prosperous 2024 and
beyond. Most notably, we have now taken a further strategic step
into North America with the award of comprehensive drilling and
laboratory services contracts with Nevada Gold Mines (USA), adding
to our existing and growing operations in Canada with MSALABS. We
are excited by the potential in the region and see it as set to be
a major contributor to group earnings in the years to come.
In mining we were awarded our second material mining contract at
Ivindo, Gabon, cementing our reputation for load & haul
services with blue-chip customers and continuing our strategy to
diversify our revenue stream through an expanded service
offering.
In MSALABS we also continued our aggressive growth strategy
driving global adoption of the new and revolutionary PhotonAssay
technology. We are proud to now have the largest international
network of PhotonAssay units while also forging a broader
partnership with Barrick Gold and Chrysos to drive a continued
laboratory rollout through 2024 and beyond.
The Group has delivered outstanding compound annual revenue
growth of 33% since 2020 and we are confident of maintaining our
growth momentum as we start 2024. This is not only through our
active tendering pipeline but also our stellar safety performance,
blue-chip customer base and focus on long term mine site contracts,
as highlighted by the substantial contract extension at Sukari,
underpinning the business for this further growth."
- ENDS -
For further information, please visit Capital's website
www.capdrill.com or contact:
Capital Limited investor@capdrill.com
Peter Stokes, Chief Executive Officer
Rick Robson, Chief Financial Officer
Conor Rowley, Corporate Development & Investor Relations
Tamesis Partners LLP +44 20 3882 2868
Charlie Bendon
Richard Greenfield
Stifel Nicolaus Europe Limited +44 20 7710 7600
Ashton Clanfield
Callum Stewart
Rory Blundell
Buchanan +44 20 7466 5000
Bobby Morse capital@buchanan.uk.com
George Pope
About Capital Limited
Capital Limited is a leading mining services company providing a
complete range of drilling, mining, maintenance and geochemical
laboratory solutions to customers within the global minerals
industry. The Company's services include: exploration, delineation
and production drilling; load and haul services; maintenance; and
geochemical analysis. The Group's corporate headquarters are in the
United Kingdom and it has established operations in Côte d'Ivoire,
Canada, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea,
Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi Arabia, Tanzania
and the United States of America.
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